eBusiness Weekly
Malvern Nkomo
Stock markets’ returns often outpace the rate of inflation in most cases and thus give the investor a low risk profile while improving returns.
Over the long term, stocks have historically provided a hedge against inflation, allowing investors to preserve the purchasing power of their capital with the potential of high returns and passive income for the investor.
Though the stock market is subject to short-term volatility and fluctuations, over longer time horizons, investing in the stock market provides attractive returns that allow investors to preserve and grow their wealth.
In 2023, the Zimbabwe Stock Exchange market (ZSE) endured a tough year characterised by high levels of inflation and currency depreciation.
Using a parallel market exchange rate of US$1:$900 at the beginning of the year and of US$1:$9 500 at the end of the year there were just three more stocks that closed in the red than those that closed in the positive territory.
At the close of trading last year, the market had 32 stocks in the red where a US$100 investment at the beginning of the year would have lost value by US$1 or more by year end while 29 counters ended the year with a gain of US$1 or more.
Assuming an investor decided to invest a US$100 each in Econet and Delta at the beginning of 2023, the investments would have shrunk to about US$83,24 and US$92,41 respectively by year end.
Similarly an investor who had put US$100 in ZECO, would have suffered the most with the investment being shredded to US$11,45 for the same period under review.
Moreover, an investment in Innscor would have also lost approximately US$44,51 during the year while Old Mutual lost approximately US$38,68 during the year.
However, a US$100 investment in Zimre Holdings Limited is estimated to have attracted a 334,69 percent gain to US$434,69 while other counters like FMHL and Nampak also made significant gains during the year with an estimate of 287,41 percent gain to US$387,41 and 210,18 percent to US$310,18 respectively.
Looking at the overall performance of the market by sector, the Financial Sector showed great resilience up by 124,77 percent followed by the Industrial sector up 43,95 percent in US Dollar terms.
The Consumer Discretionary Sector witt stocks such as RTG, Edgars, Truworths and NTS, gained by 26,91 percent during the year, a fairly reasonable gain owed to a 96,78 percent gain in RTG.
Despite the Consumer Staples Sector having great potential it did not perform as expected during the year, up by only 16,7 percent given that it has counters like Delta, Ok Zimbabwe, Hippo, Tanganda among others
However, in norminal terms the ZSE All Share, the benchmark index which measures the overall market performance, closed with a year to date gain of 981,54 percent while the ZSE Top 10 Index closed with a 631,74 percent year to date gain(YTD).
As of December 29, the top five (YTD) gainers were led by ZHL at $184,45 with a year to date gain of 4 488,4 percent followed by FML at $1 046,86 and a YTD of 3 989,28 percent.
Nampak was third on the list at $295 and a YTD of 3174,14 percent while FMP closed the year at $322,05 at 2 583,75 percent.
TSL stood at $1 100 by the close of trading with a year to date gain of 2 399,73 percent.
